Blog by Carolyn A Humphrey, RICP, WMCP CLF - Co-Founder Empowered Financial Strategies, Advocate for Financial Education / Goals include daily exercise, clean eating and being the best Spouse, Aunt and Dog Mom
Written May 9, 2022
I had an interesting conversation with a newly retired woman last Friday while out to dinner. If you don’t watch the stock market as closely as I do, Friday was the day the Dow Jones dropped by more than 900 points. We saw major companies, who in recent memory seem to be a step ahead with consistent growth of their stock price that lost a fair amount of ground that day. We have the Federal Reserve talking about another half percent increase to interest rates in May. We also have the war in Ukraine and the fact that we are seeing the highest inflation in 40 years.
The question that was asked of me, is, "what do I do now?" I was out with friends and could not offer advice without a full dive into her financial situation, but what I offered is the following: Most of us are responsible for our retirement in a way our parents/grandparents never had to be. We have to think of things differently. When your grandfather retired, he most likely retired with a full pension, social security and a bit of savings. We are living longer than earlier generations and that means our investments need to last us longer and most of us don’t have that large pension payment they can depend on.
When you are working, the name of the game is accumulation. Accumulate assets so that you can build income for retirement. However, there must be a plan in place first for this income in retirement. This income must flow regardless of your health, inflation and the stock market. We need to find a way to replace that pension.
We also need to understand that we need a liquid cash bucket for unplanned expenses or just a great trip. We also need to have an answer in case you or your spouse need some sort of long-term care. Hint, the odds are in your favor that one of you will. If you have known anyone who has dealt with this, that does not come cheap.
Whether you are in your 20’s, 30’s, 40’s or older, you should be building that liquid Emergency/Opportunity fund as well as building a strategy for income in retirement and a plan should you need some sort of long-term care. A number of years ago, I earned the Retirement Income Certified Professional® designation through The American College. I have found this knowledge to be invaluable as I craft ways for my clients to build protection for all types of risks while we build wealth; wealth to provide income for your lifetime. We also want a plan, so that if you don’t spend your last dime on this earth, there is an efficient strategy to pass your wealth to whom you wish.
Are you feeling anxious or stressed and thinking “What do I do now?” Have you not had a conversation like this with a financial advisor and want to make sure you have a plan in place? Reach out to us at Empowered Financial Strategies by emailing firstname.lastname@example.org. We would love to hear your concerns, your goals and see if we can help build your strategies with you.